Budget 2015: Exemptions available to individual tax payers

Budget 2015: Exemptions available to individual tax payers

I have compiled a summary of exemptions now available for tax payers in this table and hope it is useful.These are based on my understanding and for informative purposes. For filing your returns, please take the assistance of your tax consultant.

Section	Amount in Rs.	Details
80CCC	150000.00	PPF, EPF, Mutual Fund ELSS, Insurance Premium, NSC, Senior Citizen Savings Scheme, 5 yr. PO and Bank Deposits, NPS contributions, any notified pension scheme, Deposits in Sukanya Samriddhi Yojana for girl child, Repayment of home loan; tuition fees of children. In addition to this deduction of 150000.00 there is further deduction allowed now u/s 80CCD….see below
80CCD	Additional 50000.00	Contribution towards a notified pension scheme subject to 10% of salary + 50000.00. Total deduction under 80CCC and 80CCD should not be > 200000.00 That is you can use 150000.00 deduction in the above 80CCC schemes and additional amount in a pension scheme notified by the Government
80CCG	25000.00	50% of investment subject to a maximum of Rs. 25000 in ESS of Mutual Fund or in equity(earlier called RGESS )
80D	25000.00 (30000.00 for senior citizens) + 5000.00	Payment towards mediclaim premium. In addition Rs. 5000.00 additional deduction allowed for amount paid towards preventive health check-ups
80DD	75000.00	Deduction for medical expenses on a dependant who has 40% disability. If disability is 80%, an amount of Rs 125000.00 is deductible
80DDB	40000.00	Deduction allowed towards treatment of a critical ailment. The amount is 60000.00 for a senior citizen (60 yrs.) and Rs 80000.00 for a senior citizen above 80 yrs.
80G		50% of donation paid to a charitable trust can be deducted from income
80GGC		Any amount paid to an electoral trust of political party
80GG	24000.00	Rent paid on accommodation –  upto a maximum of 25000.00 p.a or 25% of income provided one does have any other HRA or own a residence
24B	200000.00	The interest component of home loans is allowed as deduction under Section 24 B for up to Rs. 2 lakh in case of a self-occupied house. Was earlier 150000.00
80E		Deduction allowed for interest paid towards education loan for higher studies. Maximum period of deduction is 8 years or till loan is repaid

Budget 2014 - Changes in Personal Income Tax

Summary of changes in personal income tax which affect us are given below:

• Tax slab for individuals raised by Rs. 50000 - this means that for individuals, the exempted limit would be Rs. 2,50,000.00 ; for senior citizens, it is Rs. 3,00,000.00 . Please note that there is no change in the limit for senior citizens above 80 years old - the exempted limit remains at Rs. 5,00,000.00
• Deduction u/s 80C increased to Rs. 1.5 Lakhs - simultaneously, the PPF investment limit has also been raised from Rs 1 Lakh to Rs. 1.5 Lakhs
• Deduction for interest paid for a housing loan u/s 24, has been increased to Rs 2 Laksh from Rs. 1.5 lakhs. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.
• Indexation benefit for debt mutual funds ( all non-equity mutual funds) : To qualify as long term investment, the period of holding of a non-equity mutual fund is now increased to 3 years from 1 year earlier.This amendments will take effect from 1st April, 2015 and will accordingly apply, in relation to the assessment year 2015-16 and subsequent years. If you are investing in any existing debt fund / FMP or any non-equity mutual fund, you will have to hold on to the units for 3 years to have the investment qualify for indexation benefits.  

• Capital Gains deduction under Sec 54 EC - for assets sold after September, ambiguity regarding investment amount due to change of financial year has been removed:  The existing provisions u/s54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, within a period of six months, invested the whole or part of capital gains in Capital Gains Bonds the proportionate capital gains so invested in the long-term specified asset, out of the whole of the capital gain, shall not be charged to tax. This investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. However, the wordings of the proviso had created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief of fifty lakh rupees. Accordingly, it is now proposed that the investment made by an assessee  in the long-term specified asset, out of capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees totally. This means that exemption is limited to Rs 50 lakhs. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years.

Some changes and points to note

• TDS on non-exempt insurance payments above Rs. 1 Lakh: Under the existing provisions of section 10(10D) of the Act, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt subject to fulfillment of conditions specified under the said section. Therefore, the sum received under a life insurance policy which does not fulfill the conditions specified under section 10(10D) are taxable under the provisions of the Act. In order to have a mechanism for reporting of transactions and collection of tax in respect of sum paid under life insurance policies which are not exempted under section 10(10D) of the Act, it is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. on sum paid under a life insurance policy, including the sum allocated by way of bonus, which are not exempt under section 10(10D) of the Act. In order to reduce the compliance burden on the small tax payers, it has also been proposed that no deduction under this provision shall be made if the aggregate sum paid in a financial year to an assessee is less than Rs.1,00,000/-. This amendment will take effect from 1st October, 2014.
• Kissan Vikas Patra to be re-introduced
• No change made in deductible amounts u/s 80 D - payments for mediclaim policies

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